* Spot iron ore slumps nearly 5 pct to new lows
* Bearish market sentiment driving down prices further
(Updates prices)
SHANGHAI, April 3 (Reuters) - Chinese iron ore futures
dropped for the eighth straight session on Friday and posted
their biggest weekly loss ever amid weak buying interest in
global top consumer China and excess supply of the steelmaking
material.
Benchmark 62 percent grade iron ore for immediate delivery
to China .IO62-CNI=SI plunged 4.7 percent on Thursday to
$46.70 a tonne, the lowest level since the Steel Index began
compiling the prices in late 2008.
Steel mills that are struggling with slower-than-expected
demand recovery have capped production and held back building up
stocks on expectations that a supply glut would further depress
prices of the steelmaking ingredient.
Iron ore futures for September delivery on the Dalian
Commodity Exchange dropped to as low as 370 yuan ($60)
a tonne, the weakest since the launch of the contract in October
2013.
Prices closed down 1 percent at 380 yuan on Friday, and
falling 10 percent for the third straight week, its biggest
weekly loss.
The low-cost production expansion by the world's largest
iron ore miners Vale, Rio Tinto and
BHP Billiton is expected to keep prices at
relatively low levels for a long time, analysts say.
"Top miners are using low prices to take over market share
in China and squeeze others out of the market," said Li Yajing,
an analyst at Guangyong Futures in Guangzhou.
Some investors have started to take long positions on
expectations of a technical rebound after the sharp declines in
iron ore prices, but analysts expect any potential gains will be
capped due to weak fundamentals.
"Some investors believe that prices have touched bottom and
have switched to a long position, but I expect the weak spot
market to drag prices lower," Li said.
The most-traded October rebar contract on the Shanghai
Futures Exchange fell for the fourth straight session
hitting a session low of 2,336 yuan, weakest since the bourse
started trading the contract in 2009.
Prices closed 1.1 percent lower at 2,341 yuan, and lost 4.2
percent for the week, falling for the sixth consecutive week.
Rebar and iron ore prices at 0701 GMT
Contract Last Change Pct Change
SHFE REBAR OCT5 2341 -26.00 -1.10
DALIAN IRON ORE DCE DCIO SEP5 380 -4.00 -1.04
THE STEEL INDEX 62 PCT INDEX 46.7 -2.30 -4.69
METAL BULLETIN INDEX 47.08 -2.45 -4.95
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.1930 Chinese yuan renminbi)
(Reporting by Ruby Lian, David Stanway and Shanghai Newsroom;
Editing by Tom Hogue and Biju Dwarakanath)